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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






2. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






3. When firms focus their resources on production of goods for which they have comparative advantage






4. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






5. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






6. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






7. Ed > 1 - meaning consumers are price sensitive






8. The imbalance between limited productive resources and unlimited human wants






9. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






10. The total quantity - or total output of a good produced at each quantity of labor employed






11. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






12. AFC = TFC/Q






13. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






14. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






15. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






16. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






17. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






18. Ed = 8 - infinite change in demand to price change






19. The change in quantity demanded resulting from a change in the price of one good relative to other goods






20. All firms maximize profit by producing where MR = MC






21. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






22. Models where firms agree to mutually improve their situation






23. Exists if a producer can produce a good at lower opportunity cost than all other producers






24. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






25. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






26. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






27. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






28. The marginal utility from consumption of more and more of that item falls over time






29. 0 < Ei < 1






30. Total product divided by labor employed. APL = TPL/L






31. Ei > 1






32. Es = (%dQs) / (%dPrice)






33. MUx / Px = MUy/Py or MUx/MUy = Px/Py






34. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






35. The sum of consumer surplus and producer surplus






36. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






37. The additional cost incurred from the consumption of the next unit of a good or a service






38. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






39. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






40. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






41. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






42. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






43. Product demand - productivity - prices of other resources - and complementary resources






44. The practice of selling essentially the same good to different groups of consumers at different prices






45. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






46. The most desirable alternative given up as the result of a decision






47. Costs that change with the level of output. If output is zero - so are TVCs.






48. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






49. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






50. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC